In 1998, Lynn Elliott, MBA, CPA, accepted a position as CEO of the thriving, hospital-based practice of Radiology Associates of Tarrant County (RATC), Fort Worth, Tex. With nine hospital clients but just one full-service imaging center, RATC charged Elliott with the task of growing the practice’s outpatient imaging center business. Fresh from a stint with a nephrology practice during which he built 10 dialysis centers in 18 months, Elliott had extensive experience in developing outpatient medical facilities.
Ten years later, RATC has two new hospital clients, but a quite a few more imaging centers—a total of 13, plus three more that it manages. With 61 radiologists and more than 350 employees, RATC now looks to Elliott to lead the practice out of what he refers to as the field-of-dreams era and into a new, post-DRA period characterized by declining reimbursement, utilization controls, and, most of all, rapid change. Elliott also serves as CEO of an associated consulting company, ASI, Fort Worth, Tex. He agreed to share with the readers of ImagingBiz.com his strategy for RATC and his thoughts on what it will take to thrive in the coming years.
“Simply responding to the changes is not going to be enough. To be successful, leaders are going to have to anticipate change. They are going to have to develop strategies in advance so that they can not only survive, but also take advantage of the opportunities that are there.” —Lynn Elliott, MBA, CPA CEO, Radiology Associates of Tarrant County
ImagingBiz: After years of growth, RATC has developed a robust infrastructure. How are you leveraging that capacity to fuel growth?
Elliott: Over the past 10 years, the existing management team at RATC has been involved in the development and management of 16 imaging centers, 13 that are owned and three that are managed. One of the byproducts of that expansion is the development of a strong management infrastructure with a lot of experience and expertise.
About three years ago, we were contacted almost simultaneously by a couple of hospital-based radiology groups, outside of Texas, who were aware of what we had done. They wanted to do the same thing with their practices, so we invited them to come and visit RATC. Once they saw what we had done, they were wanted to do the same thing themselves.
As they looked at our operations, they understood that because they were hospital based and virtually the only employees they had were billing employees, they didn’t have expertise even to design an imaging center, much less to build and manage it going forward. In talking with them about that, we suggested that perhaps we could help them. As we talked further, the idea of being partners with them in the development of the center and helping them build and manage it going forward emerged pretty quickly.
At that point, we had not considered getting into management and consulting as a separate line of business, but almost immediately after we started working with these groups, the word spread, and we began to get other inquiries. After some deliberation, we formed ASI to be an affiliate of RATC, with the idea that we would market this expertise and experience we had developed in our own centers across the country.
ImagingBiz: What were the historic pathways to growth, and why are those options less viable in the current market?
Elliott: If you look at the past 20 years, utilization of imaging, primarily outpatient, has skyrocketed. Utilization was up double digits nearly every year until recently, and much of that growth came in the outpatient market. There were a number of things driving that: technological advances, population growth, consumer awareness, and the intensity of defensive medicine. For those involved in the industry at that time, the primary challenge was planning to accommodate the growth. MRI centers were cropping up everywhere across the country, and as soon as they were built, their schedules would be full. I like to refer to that period as the field-of-dreams era, in which if you built it, they would come.
The dynamics of the industry made those kinds of growth rates unsustainable. I think what you’ve seen in the last few years are some regulatory and market forces that are really focused on reducing the rate of growth in outpatient imaging. I don’t think anyone believes they’ll ever stop the rate of growth in the industry, but something had to be done, and it was done. You are seeing pressure